MichaelPaige

Juniper
JNPR, -1.85%
late Wednesday reported fiscal first-quarter net income was little changed from a year earlier as expenses such as those related to stock options offset much of a 26% increase in revenue.

The stock began falling in evening trading even though profit before special items met Wall Street's expectations. While Juniper executives said they continued to expect growth to pick up in the second half, the company's second-quarter estimate was below the consensus estimate.

Juniper shares fell $2.05 to close at $18.25 in the wake of the results and outlook. The latest slump extended the shares' 9% loss this year ahead of the results. The shares have ranged $16.98 to $27.65 over the past 52 weeks. See charting.

Calling both the first-quarter revenue and the forecast "weak," Oppenheimer & Co. analyst William Becklean cut his rating on Juniper shares to neutral from buy.

"With the prospect of relatively slow top-line growth over the next two quarters, we believe the upside in the stock is limited," he told clients.

Options, expenses weigh on bottom line

First-quarter profit edged higher to $75.8 million from $75.4 million in the year-earlier period. Per-share profit was unchanged at 13 cents. Expenses related to employee stock options damped the latest results by 2 cents a share.

The company, a top competitor of market leader Cisco Systems Inc.,
CSCO, -1.29%
said revenue climbed to $566.7 million from $449.1 million on stronger sales of its products to corporations and telecommunications companies.

Absent the effect of one-time items, Juniper would have posted earned $113.4 million, or 19 cents a share, up from $91.9 million, or 16 cents a share.

The results were within a range the Sunnyvale, Calif., company forecast in January.

Wall Street analysts, on average, expected profit of 19 cents a share before items and excluding option expenses, on revenue of $571 million, according to a Thomson First Call survey.

Chief Financial Officer Bob Dykes forecast second-quarter profit of about 19 cents a share on revenue ranging from $560 million to $570 million, up about 14% to 16% from the year-earlier period.

Analysts had expected profit of 20 cents a share for the current quarter, with revenue growing 19% to $587.3 million.

Speaking during a conference call to discuss the company's results, the CFO said Juniper continues to expect growth to pick up in the second half, with a rise more likely later in the year given traditional seasonal patterns.

Executives plan to provide a specific financial forecast for the second half when Juniper reports its next results, Dykes said.

Juniper Chairman and Chief Executive Scott Kriens said in a statement that the results "reflected the continuing acceptance of Juniper's product portfolio with both our enterprise and service-provider customers."

"We will intensify our focus on execution in order to capitalize in an environment where our capabilities and the market requirements are aligning more clearly than ever before," he added.

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